While the company stated that it usually incurs losses in the second quarter due to the seasonality of its tax and business service operations, expenses related to the acquisition of H&R Block Financial Advisors Inc. and RSM McGladrey Inc. pushed second-quarter net losses to $49.7 million, or 54 cents per share. Last year, the company reported a net loss of $44.7 million, or 46 cents per share.

Revenue for the second quarter climbed 73 percent to $362.6 million, compared to $209.9 million for the same period last year. H&R Block said the increase in revenue was driven by the first-time inclusion of H&R Block Financial Advisors, formerly Olde Discount Corp., which was acquired Dec. 1, 1999.

U.S. tax operations reported a pretax loss of $87.2 million, versus $83.7 million last year. Block said office expansion, franchise acquisitions, rent expenses and the development of online services for the upcoming tax season contributed to its increased loss.

The first-time inclusion of H&R Block Financial Advisors helped boost the financial services' pretax earnings to $32.4 million, a 54.9 percent increase over last year. Revenues rose 163.8 percent to $241.4 million, the company stated.

The Mortgage Operations, which include Option One Mortgage Corp. and H&R Block Mortgage Corp., reported pretax earnings of $20.7 million, a 10.9 percent decrease from last year. Revenue rose 24.5 percent to $109.8 million.

The business services arm, which primarily includes RSM McGladrey, saw revenue decline 5.9 percent to $78.3 million, compared to $83.2 million last year. However, pretax losses improved by 32.2 percent to $0.8 million, the company said.

-- SmartPros News Staff

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